Charities have been allocated more than £3m in loans so far from a government-backed scheme to ease financial pressure caused by the coronavirus pandemic.
Eight charities have applied successfully for loan finance from the Resilience and Recovery Loan Fund (RRLF) since it opened a month ago, according to data from the Social Investment Business (SIB).
£25m in loans is available through RRLF. The scheme, which was first announced in April, is funded by Big Society Capital and run by SIB with its partners Big Issue Invest, Charity Bank, and Social and Sustainable Capital.
The fund has access to the Treasury’s Coronavirus Business Interruption Loan Scheme, which means that lenders are protected by a government-backed guarantee for the loan repayments.
The data shows that 28 voluntary organisations have applied for loans, with £3.195m approved for eight charities so far.
This is from total approved loans worth £4.935m. The RRLF has allocated the additional money to social enterprises, community interest companies and community benefit societies.
SIB says that the average loan period is three years, which is the maximum available. There are no fees or interest charged on the first year of any loan, which is covered by the Treasury, with interest rising to 6.5% in years two and three.
Focusing on children, poverty and jobs
Charities are not separated from other loanees in the further data, which shows that the main focus for organisations receiving loans is helping vulnerable children, and working with people experiencing poverty and long-term unemployment.
One-in-three of the organisations are based in London, and one-in-three say that they are led by people from black and ethnic minority backgrounds. Just under a third say they are led by women.
SIB welcomed the fact that charities with a background in traditional fundraising were among those now receiving loan finance to support them through the coronavirus crisis.
Nick Temple, the chief executive of Social Investment Business, said: “The organisations that we are seeing come through the Resilience and Recovery Fund demonstrate the breadth of impact that the pandemic and lockdown has had on charities and social enterprises.
“We have approved loans to a wide variety of organisations with different models, from charities with a strong fundraising track record to social enterprises providing services.
“What connects them is the interruption to their normal way of working, and their need for immediate working capital – and while loans are not the answer for all, we are working hard to provide them where they fit the bill and meet a need.”